Despite an ongoing “visa crisis,” (see below) the US and Israel have taken the final step before finalizing Israel as a participant in the E-2 Non-Immigrant Investor Visa program, designed to allow foreign nationals to invest in the US economy, and vice versa, through reciprocal treaties of commerce. The E-2 Visa will allow Israeli citizens, along with any essential employees and family, to live and work in the US so they can oversee their investments.

In 2012, President Obama signed legislation that would add Israel to the list of countries eligible for E-2 nonimmigrant investor visas to the United States. However, the law’s implementation was on hold for over two years because Israel had not yet ratified the Treaty. The visa program can only take effect once both countries agree to all terms and conditions.[1]

Over 2 years after the U.S. government approved the legislation, in what has been described as a “sudden turnaround,” the Israeli Knesset finally approved the visa legislation on August 13, 2014. According to Interior Minister Gideon Sa'ar, “The investor visa approval is expected to contribute to Israel's economy and create jobs for the citizens of Israel in the future.” He added that the agreement will open “new avenues for investment in the joint Israeli-American economy." In addition to granting investor visas, the E-2 program also allows citizens of Israel and the United States to make joint investments.[2]

The Knesset’s decision to grant reciprocal visas to American investors in Israel took place amidst an ongoing “visa crisis,” which played out over the course of 2014. In February, 2014, State Department visa figures revealed that many Israelis were being barred from entering the US, including investors, as well as tourists[3] and Israeli defense officials.[4] Following accusations that the US was rejecting Israeli visa applications for political reasons, the US Secretary of State John Kerry launched an internal review on April 13th, 2014 to look into these claims. An initial investigation found that the rejection rate of visa applications for young Israeli tourists had indeed doubled, from 16% in 2009 to 32% in 2014.[5] These findings are part of a rising trend of Israeli visa rejections that has taken place over several years.[6]

The high rate of Israeli visa rejections has profound implications, as it caused Israel to lose its place on the "white list," the list of countries whose citizens can visit the US without a visa. Only nations with a visa rejection rate of less than 3% are allowed on the list.[7]

Following these initial revelations, US Ambassador to Israel Dan Shapiro announced that the State Department would “take immediate steps to increase the number of young Israelis that can travel to the US according to our immigration laws.” He also assured Israel that it “is one of the US's closest allies” and that the US welcomes “all networking between Israelis and Americans, including visits to the United States."[8]

Though the State Department’s investigation is not yet complete, the United States’ recent re-commitment to improving relations with Israel by increasing the number of visas granted to Israeli nationals may explain the Knesset’s sudden turnaround this past August. In addition, Israel needed time to iron out some details of the legislation and how it would be implemented, particularly because Israeli immigration law did not have a visa category that parallels the US’s E-2 visa. Moreover, historically, Israeli immigration law has not granted visas to an investor’s accompanying spouse as does the E-2’s Employment Authorization Document (EAD).[9] There are additional politically-driven concerns on the Israeli side which temper the resistance. However, notwithstanding the reason for Israel’s turnaround, ratifying the US-Israel bilateral E-2 visa will no doubt encourage economic growth in both countries and strengthen their political relations.
To find out about professional, credible and comprehensive Visa Business Plans, as well as a variety of ancillary services, all of which are designed to specifically address USCIS’s concerns, contact e-Council Inc.com at info@ecouncilinc.com.
e-Council Inc.com’s website, newsletter and other forms of communication contain general information about legal matters. The information is not legal advice, and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.

In the USCIS engagement EB-5 stakeholder’s meeting on December 5, 2014, the general partner of a non-Regional Center sponsored direct EB-5 investment assisted living facility project asked for clarification and relief regarding the potential effects of retrogression on investors in direct projects. The questioner noted that investors in direct projects have heighted participation requirements compared to those investing in regional centers. This understanding of the ‘Active Management Requirement’ is actually a common myth circulating around the EB-5 community, which has no basis in the law.

Unfortunately, USCIS did not affirmatively answer the question, but rather said they would consider addressing it when they issue their retrogression policy guidance later this year. To not keep the EB-5 community waiting, I’ll use this opportunity to review the rules in detail and hopefully dispel these common misunderstanding.

In short, if the entity into which the investments are made are structured as a limited partnership, the code of federal regulations provides a clear pathway for how investors can satisfy the ‘Active Management Requirement’. Under 8 CFR §204.6 (j)(5) requires, as initial evidence to accompany the I-526 Petition in the context of a limited partnership, that the petitioner:

“(5) To show that the petitioner is or will be engaged in the management of the new commercial enterprise, either through the exercise of day-to-day managerial control or through policy formulation, as opposed to maintaining a purely passive role in regard to the investment, the petition must be accompanied by:

(iii) If the new enterprise is a partnership, either limited or general, evidence that the petitioner is engaged in either direct management or policy making activities. For purposes of this section, if the petitioner is a limited partner and the limited partnership agreement provides the petitioner with certain rights, powers, and duties normally granted to limited partners under the Uniform Limited Partnership Act, the petitioner will be considered sufficiently engaged in the management of the new commercial enterprise.”

“While an alien may seek EB-5 qualification on the basis of an investment in a limited partnership, under current regulations, even he or she, as a limited partner, must have a certain level of involvement in the running of the business.

Under 8 CFR 204.6(j)(5)(iii) , if the alien is a limited partner, he or she must have been granted all (i.e., not simply some) of the rights, powers, and duties granted to the other limited partners in the partnership in order to be considered sufficiently engaged in the business.” [emphasis added]

Accordingly, if in the partnership every limited partner is afforded the identical rights of every other limited partner, the requirements, as interpreted by the Adjudicator’s Field Manual, are satisfied. In addition, if the partnership is structured in compliance with subsection (iii) cited, whereby it provides the Employment-Based Immigrant with the “rights, powers and duties normally afforded to limited partners under the Uniform Limited Partnership Act” (“ULPA”), then the petitioner has satisfied the management participation requirements. (Full text of the Uniform Limited Partnership Act (2001) available at http://www.uniformlaws.org/shared/do...al_2001rev.pdf.

The language in the CFR is somewhat odd in that the uniform act does not specifically deal with limited partner management rights. (See http://www.uniformlaws.org/Legislati...tnership%20Act.) Accordingly, what is ‘normal’ is a matter of context. Normally, as a matter of state’s law, a limited partner is granted active management duties, the limited partner would lose their limited liability status as a limited partner. Limited partners are generally afforded the ability to control the partnership in the case of extreme situations, such as liquidation or material adverse event in the business affairs of the partnership in question. So if the limited partnership agreement would provide the limited partner investors the right to replace the general partner (and take control of the partnership) in the case of a proposed liquidation of the partnership or some other materially adverse event (potentially including the failure to create sufficient jobs to support the investors’ I-829 petitions), then the investors would be afforded the rights, powers and duties normally afforded and they should be deemed in satisfaction of the ‘Active Management Requirement of 8 CFR §204.6 (j)(5).

The demand for EB-5 visas, especially from Chinese investors shows little likelihood of slowing down. If anything, there is probably a good case for increased the quota limits. In fact, there is a simple suggestion that is hanging around the halls of Congress that may make its way into the proposed immigration reform bill. And it is a good suggestion.

It is commonly misunderstood that there are 10,000 visas allotted for Chinese investors. The reality is that there are 10,000 visas allotted for Chinese immigrants. If all EB-5 investors had a family of four, it would require four visas for the entire family to immigrate, which would effectively cap the number of actual investors at 2,500. The actual number of visas being issued per investor family is about 1.5, so even with that the actual number of investors is somewhere between 4,000 and 4,500.

The EB-5 visa program has become the win-win program that it was intended to be. The popularity from both the investment and the investor side is skyrocketing. The aforementioned, simple proposal is for the U.S. government to make 10,000 visas equal 10,000 investors. That would make available a minimum additional $2.75 billion of funding and would require only additional 5,000 visas for family members.

To learn more about how to put the EB-5 investment visa program to work for you, contact Dr. Gregory Finkelson at American Corporate Services or call 415-682-2550. To order my book, How to Find Chinese Investors, Agents & Clients for Your EB-5 Projects & Services - A Practical Guide for Regional Centers, Attorneys, Developers and Businessmen, click here.

When applying for an EB-5 Visa, the process can be very intimidating. There are multiple steps that require professional assistance in order to successfully secure an EB-5 Visa.

The first formal, regulatory step in the EB-5 process is to file an I-526 form, aka "Petition by Alien Entrepreneur," used by the entrepreneur who is seeking to immigrate to the US[1]. The basic requirements to obtain an EB-5 Visa are that an investor must invest $1,000,000 or $500,000 in a targeted employment area[2] and create at least 10 full-time jobs. The investment cannot be borrowed and any assets illegally obtained will not be considered capital. The following evidence may be filed to show that the capital was acquired through lawful means.

Foreign business registration records

Personal and business tax returns, or other tax returns of any kind filed anywhere in the world within the previous five years

Documents identifying any other source(s) of funds

Certified copies of all pending civil or criminal actions and proceedings, or any private civil actions involving money judgments against the investor within the past 15 years[3]

A common problem that is reported is submission of insufficient documentation showing that the source of the funds was lawfully obtained, and this is a pivotal component of eventual success. In order to avoid this problem, the applicant needs to be mindful that the exact documentation USCIS needs depends on the source of the investment funds. For example, if the investor received an inheritance, then a copy of the will would be a necessary piece of evidence for the application. In this situation it would not be sufficient to submit bank statements alone as evidence of lawful income because USCIS is looking for actual proof of the inheritance. Detail is necessary to prove to the adjudicating officer the exact source of the funds erasing any belief that they are not lawful. This could include bank statements showing the path of funds from the moment they entered the investor’s possession until the time they were invested, in addition to other supplemental documents such as a contract if the income is from a sale of a business

Another major issue with EB-5 cases involves job creation. At the I-526 stage, USCIS requires a comprehensive, “credible” business plan; at the I-829 stage evidence of job creation is necessary. Evidence of job creation may include, but is not limited to:

Business payroll records

Relevant tax documents

Employee Forms I-9[4]

There have been many cases in which an investor did not hire a professional business plan company or hired a firm that ended up delivering a sub-standard product such that the outcome was less than desirable. It is essential to hire the right team of professionals to assist in each stage of the EB-5 process. By hiring such a team, an investor will be prepared to successfully petition for an EB-5 Visa.

To find out about professional, well-researched, articulate, expository narrative Visa Business Plans, whether for EB-5 or any other business-related Visa, as well as a variety of ancillary services, all of which are designed to specifically address USCIS’s concerns, contact e-Council Inc.com at info@ecouncilinc.com.

e-Council Inc.com’s website, newsletter and other forms of communication contain general information about legal matters. The information is not legal advice, and should not be treated as such. You must not rely on the information on this website as an alternative to legal advice from your attorney or other professional legal services provider. If you have any specific questions about any legal matter you should consult your attorney or other professional legal services provider.

[2] A targeted employment area is an area that, at the time of investment, is a rural area or an area experiencing unemployment of at least 150 percent of the national average rate. A rural area is any area outside a metropolitan statistical area (as designated by the Office of Management and Budget) or outside the boundary of any city or town having a population of 20,000 or more according to the decennial census.

Unfortunately, due to the more or less casual nature of everyday conversations concerning the EB-5 investment visa program, some people think that the burden of job creation falls upon the foreign investor. As a rule, we tend to say something like, “a minimum of 10 jobs must be created per investor.” That statement, although not entirely erroneous, is misleading.

The entity that is responsible for the creation of 10 jobs per investor is the NCE, or New Commercial Enterprise. It is the organizational entity that is managing the project. The NCE is the entity to which the EB-5 funds are ultimately loaned. It is the NCE’s responsibility to plan the project and bring it to completion in conformance with the USCIS requirements so that the project is eligible for EB-5 funding, positioned to return the investors’ money, create the appropriate number of jobs and to secure the investors’ permanent residency status.

The burden is not on the individual investors. Because those investors do not have control over their money during the project, and because meeting the USCIS job creation requirement falls upon the NCE, each EB-5 investment is, as the program requires, truly “at risk.”

To learn more about how to put the EB-5 investment visa program to work for you, contact Dr. Gregory Finkelson at American Corporate Services or call 415-682-2550. To order my book, How to Find Chinese Investors, Agents & Clients for Your EB-5 Projects & Services - A Practical Guide for Regional Centers, Attorneys, Developers and Businessmen, click here.